19-01-2013, 03:10 PM
BUSINESS ETHICS AND CORPORATE GOVERNANCE OBJECTIVE OF THE CHAPTER
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The aim objective of this chapter is to give a basic understanding of ethics and its application in the relevant fields of business study human behavior. It is to establish & prioritize moral standards & the values of any business and understand by any entity the scope, concept and importance of Ethics, its gradual development and the relevance in business scenario. It also aims to encourage independent critical thought and develop an individual system of ethics within an individual and the organization at large. A business established with a foundation of strong ethics and values is more promising, successful and enduring than that of rapid growth at a cost of many compromises. Presenting moral behavior i.e. making recommendations abt how to & how not to behave, making judgment on human behavior based on the standards set of expressing an opinion abt human conduct in general.
AN OVERVIEW OF BUSINESS ETHICS
Customers want products and services for which they are ready to pay the price. Businesses create these products and services and in return multiply their returns, objective is profit. But in this process of requirements and fulfilling or meeting out the customer requirements and the expectations, companies often tend to ignore their basic principles of ethics during selling their products because then their objective of profit takes the helm. There should be their profit motive but ethically, i.e., at the same time the origin of business which was done on certain parameters and ethics should not be ignored or over-ruled. There is old French saying that has much relevance in today's corporate world. It runs thus saying, "He who knows deepest into the past looks farthest into the future." Hence, it is important to look deep into the past in the hope of perceiving the needs of the future. Business ethics reflects the philosophy of business. The basic aim of business is to create profit at all costs. Wealth creation invariably begins with a passion and the vision of its owners who lay the basic foundation of the business. They build an idea to create a product or service that is market oriented or relevant and monetarily profitable. The bottom-line of any business is how much revenue generation it is making and what kind of brand image or the goodwill of the company is getting created amongst the customers. Business success is measured quantitatively in terms of profit and loss. Profit being the mantra in business, all strategies, actions and decisions are directed towards it, sometimes regardless of what is ethically correct. It is assumed that profitable business cannot be done without a certain degree of unscrupulousness. An action might be morally correct but if it is the best move for business, then it is justified. Invariably, adjusting the numbers to record better profits becomes a matter of routine with a common dictum that business ethics is an oxymoron leading to the rules of business, values take a back seat. In this entire process of sweeping business ethics under the carpet and maximizing profits, it is overlooked that who we are and what actually influences the work that we do. Business ethics overlaps with the philosophy of business. One of the aims of business is to determine the fundamental purpose of the incorporation of a company.
On one hand if it is to make profits, it should also consider sincere means to maximize profits arid believe that there are no shortcuts to success. Corporate social responsibilities an umbrella term under which the ethical rights and duties existing between companies and society is debated. Issues regarding the moral rights and duties between a company and its shareholders, fiduciary responsibility, stakeholder concept vs. shareholder concept are argued. Ethical issues concerning relations between different companies: e.g. hostile takeovers, industrial espionage, Leadership issues, corporate governance; Corporate Social Entrepreneurship, Political contributions made by corporations towards the betterment of the society, Law reform, such as the ethical debate over introducing a crime of corporate manslaughter and to continue the misuse of corporate ethics & policies as marketing instruments are all considered, understood, argued and implemented towards practicing ethics. Leadership is a management process, a command of guidance of encouraging & helping others to work enthusiastically towards the set objectives. For Aim Premix, chairman of Wipro, integrity is paramount both in personal as well as business life. He narrates that the only advice that his father gave him was to conduct him with values and that he believes it has helped him all through his life. He has always leaded a simple life, and considered integrity the fundamental value. He ran a factory on captive power generation for 18 months just because he did not want to bribe the concerned people to get an electricity connection. That sums up his philosophy. This standard of Premji sets a benchmark for his employees in Wipro to emulate. Integrity being the guiding principle for Premji has resulted in the formulation of the 'Integrity Manual' in his company that guides through the tough choices confronted within the daily execution of the employees roles and to help create confidence in the minds of the customers , investors, suppliers and the society at large with respect to Wipro's dependability and sincerity. This is how the ethical choices of a business leader permeate into the company's organizational behavior and functioning. As is shown by the performance of companies like Wipro and Infosys a leader's personal ethics are not a deterrent to generating revenue for the company will later. It can be a foundation for higher standards of functioning, accountability and transparency that motivates the employees, influences the way they behave in the workplace, earns their loyalty and eventually helps an organization endure. No doubt the organization faces lots of turbulences in the process of inception, continuation of its proving of existence and constant attacks and challenges but it is not to be forgotten that it was but expected and had to be thought before the implementation of the idea incarnated. An individual plunges into business when he thinks he is better than somebody, can do a particular thing better, face competition more effectively, has an enhanced vision to accomplish and dares to confront the storms, takes the risks and gets into entrepreneurship. Ethics is seen to be at its peak at the inception but gradually sinks when profits takeover the prime seat in business or start losing hopes when sees that ethical ways are longer and difficult comparing the easier routes of accomplishing quicker benefits growth and meeting the reason for business establishment. So can we really meet the above and grow, getting retained in business by following ethics throughout? This is a challenging question which plays the foundation of the business further.
MEANING OF BUSINESS ETHICS
The term business ethics is quite ambiguous. It has various meanings with varied implications based on its use. Business ethics appeals to people who have a strong sense of role morality. It can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. These_ are the business principles and values that a company follows to do business. In future these ethical requirements become legal requirements of business in terms of policies, safety measures, quality products, conditions of work, needs of employee requirements etc. Gradually companies, sometimes to save cost may opt for certain compromises.—Even for the companies there is a dilemma that if they follow ethics to that hardcore standards, can they really make profits? This leads to minor acceptations in the beginning in terms of bribery, selling under quality products, etc. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters etc.). When managers reporting to NASA were thoughtful whether to ask for a postponement before what turned out to be a fateful launch of the space shuttle Challenger, the Chair of the meeting literally said, "Take off your engineering hat and put on your management hat." The hats symbolize the various roles people take on in different situations. Therefore, if the main aim of the game in business were just maximizing profit, this approach would allow a businessman to act as if business were-a moral game where success is measured in financial terms alone. Ethics thus refers to the moral principles, a sense of right & wrong or the goodness & badness of the action, their motives & the consequences further. What is ethics then?